New regime for ISAs delivers huge benefits for savers
New regime for ISAs delivers huge benefits for savers
The Chancellor’s confirmation of the changes to the ISA regime heralds a new era for individual savings in the UK. These changes which make the Government’s flagship savings scheme more consumer-friendly through increased simplicity, more flexibility, increased contribution limits, and additional links between Government savings schemes. Taken together, these changes have the potential to fundamentally transform the savings landscape.
Key changes include:
- The ability to transfer funds from Cash ISAs to Equity ISAs without affecting annual subscription limits. This will allow consumers to change their savings allocations with market conditions or savings priorities. This will allow investors more opportunity to enjoy the benefits of long-term exposure to equities which may yield higher returns. This may be of particular interest to those who have retained TESSA capital in Cash ISAs.
- Abolition of the ‘mini’ and ‘maxi’ distinctions. This will allow investors to invest into cash and stocks and shares with greater flexibility over the course of the year.
- PEPs, the legacy scheme, will be abolished and those accounts will become ISAs from 6 April. But, these ISAs won’t have to be amalgamated with existing ISAs. However, investors may choose to consolidate into a single wrapper to achieve cost-efficiencies.
- ISAs will have higher contribution limits in the tax year 2008-2009. Individuals can save more in each component—up to £3,600 in cash and up to £7,200 in stock and shares subject to the overall limit of £7,200
TISA Director General Tony Vine-Lott said,
‘These reforms are a real step forward for savings in Britain. We believe that these significantly enhance an ISA regime that has already found favour with 18 million ISA holders who have invested nearly £250 bn in the ISA regime. As a result of the conversion of PEPs to ISAs, investors will have over £300 bn in a new, more flexible savings scheme with a number of new benefits which make it even more attractive. We applaud the Government’s close work with industry on behalf of consumers to deliver a new and better way forward.’
NOTES TO EDITORS: TISA is the trade association for the retail financial services sector. TISA works to improve tax incentivised savings schemes and promotion of savings in the UK. TISA works closely with industry, parliamentarians, HM Treasury, HM Revenue & Customs and the Financial Services Authority to enhance and improve the range, features, benefits, promotion and quality of savings schemes available to all savers in the UK. These include Individual Savings Accounts, Child Trust Funds, personal pensions, employer-based schemes, and other consumer-centric, Government savings schemes and savings initiatives.
For more information visit www.tisa.uk.com or email enquiries@tisa.uk.com
For more information, please contact: Jacob Coy, Cicero Consulting +44 7900 392 531 or jacob.coy@cicero-europe.com
Tony Vine-Lott, Director General of TISA +44 1372 374 728 or 0790 006 108 or tony.vinelott@tisa.uk.com